EXHIBIT 10.17
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of the ___
day of July, 1996, by and among INTERCOAST ENERGY COMPANY, a Delaware
corporation (the "Company"), and MIDAMERICAN CAPITAL COMPANY, a Delaware
corporation ("MidAmerican").
For good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
1. Demand Registrations by MidAmerican.
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(a) Requests for Registration. At any time beginning six months following
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the closing of the Company's first underwritten public offering of shares of
common stock of the Company pursuant to a registration statement (the "Initial
Public Offering") and ending three years following the closing of the Initial
Public Offering (the "Demand Period"), MidAmerican may request registration
under the Securities Act of 1933, as amended (the "Securities Act"), of all or
part of its Registrable Securities (as hereinafter defined) on Form S-1 or any
other available or required form for the registration of securities for public
sale. The term "Registrable Securities" means (i) the common stock of the
Company held by MidAmerican after the consummation of the Initial Public
Offering, and (ii) any securities issued or issuable with respect to the common
stock referred to in clause (i) by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization. For the purpose of this Agreement, Registrable
Securities will cease to be Registrable Securities when (x) a registration
statement covering such Registrable Securities has been declared effective under
the Securities Act and such Registrable Securities have been disposed of
pursuant to such effective registration statement, (y) they are distributed to
the public pursuant to Rule 144 (or any similar provision then in force) under
the Securities Act, or (z) they otherwise become freely tradeable. Any
registration requested pursuant to this paragraph 1(a) is referred to herein as
a "Demand Registration"; provided, however, that the aggregate number of shares
of Registrable Securities requested to be so registered by MidAmerican shall be
at least 1,000,000 (such number to be appropriately adjusted for stock splits,
stock combinations and similar transactions).
(b) Demand Registration. MidAmerican will be entitled to require two
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Demand Registrations during the Demand Period (provided, however, that the
Company shall not be obligated to effect more than one such Demand Registration
during any period of twelve consecutive months) in which MidAmerican will pay a
share of all Registration Expenses (as hereinafter defined in Section 4). A
registration will not count as a permitted Demand Registration until it has
become effective (unless such registration has not become effective due solely
to the fault of MidAmerican); provided that in any event MidAmerican will pay
a share of all Registration Expenses in connection with any registration
initiated as a Demand Registration. Notwithstanding the foregoing, the Company
shall be entitled to defer the filing of any Demand Registration for a
reasonable period of time but not more than ninety days after the date such
registration statement would have otherwise been filed if the Company shall
furnish to MidAmerican a certificate signed by the Chairman or the President of
the Company stating that in the good faith judgment of the Board of Directors of
the Company the filing of a registration statement in accordance with Section 1
of this Agreement would have a material adverse effect on the Company and its
stockholders or that there exists a "Suspension Event" (as defined in subsection
1(c) below). In such event, the Demand Period shall be extended by the number
of days that the Company deferred prior to filing such registration statement.
The Company's right to defer the filing of a Demand Registration pursuant to the
provisions of the preceding sentence may not be exercised more than once during
any consecutive twelve month period.
(c) Holdback Agreements. If (i) at any time after the initial
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effectiveness of a shelf registration made pursuant to Section 1 above and prior
to the end of the Demand Period, the Company shall file a registration statement
(other than as contemplated by Section 1 hereof or on form S-4 or S-8 or in
connection with an exchange offer) with respect to its common stock or similar
securities or securities convertible into, or exchangeable or exercisable for,
such securities and (ii) with reasonable prior notice, the Company (in the case
of a non-underwritten public offering by the Company pursuant to such
registration statement) or the managing underwriter or underwriters (in the case
of an underwritten public offering by the Company pursuant to such registration
statement) shall so request, then MidAmerican shall, to the extent not
inconsistent with applicable law, refrain from effecting any public sale or
distribution of Registrable Securities (except in accordance with Section 2
hereof) during the seven days prior to, and during the 150-day period (or such
longer period as agreed upon by MidAmerican) beginning on, the effective date of
such registration statement. In addition, at any time after the initial
effectiveness of a shelf registration made pursuant to Section 1 above and prior
to the end of the Demand Period, the Company shall be entitled to require that
MidAmerican, to the extent not inconsistent with applicable law, refrain from
effecting any public sale or distribution of Registrable Securities for a
reasonable period (except in accordance with Section 2 hereof) if the Company
shall furnish to MidAmerican a certificate signed by the Chairman or the
President of the Company stating that in the good faith judgment of the Board of
Directors of the Company the public sale or distribution of Registrable
Securities would have a material adverse effect on the Company and its
stockholders or there exists a "Suspension Event" (as defined below). The
deferral shall commence on the date which such notice is received by
MidAmerican. For purposes of this Agreement, a "Suspension Event" shall exist
at such times as circumstances exist that the Company determines make it
impractical or inadvisable for the Company to file, amend or supplement the
Registration Statement or such filings or to cause the Registration Statement to
become effective or remain effective or for the sale of Registrable Securities
to occur under the Registration Statement (such circumstances to include,
without limitation, (i) pending negotiations relating to or consummation of, a
significant acquisition,
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corporate reorganization, material proposed financing, the offer or sale of
securities, or other similar transaction involving the Company, or (ii) the
occurrence of some other event (X) where any of the foregoing would require
disclosure under applicable securities laws of material information in the
Registration Statement (or any other document incorporated into the Registration
Statement by reference) that is not otherwise then required by law to be
publicly disclosed and (Y) as to which the Company has a bona fide business
purpose for preserving confidentiality. In such event, the Demand Period shall
be extended by the number of days that MidAmerican is required to defer
effecting any public sale or distribution in accordance with this Section 1(c).
(d) Selection of Underwriters and Registration Form. The Company will have
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the right to select the investment banker(s) and manager(s), if any, to
administer any offering relating hereto and the form of registration statement
utilized for such registration.
2. Piggyback Registration by MidAmerican.
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(a) Whenever the Company proposes to register any equity securities for
public sale under the Securities Act (other than pursuant to Section 1 or other
than a registration statement on Form S-8 or on Form S-4 (or any successor
forms) or any other registration statement filed in connection with a dividend
reinvestment plan) at any time and from time to time, it will, prior to such
filing, give written notice to MidAmerican of its intention to do so and, upon
the written request of MidAmerican given within 15 days after the Company
provides such notice, the Company shall use its best efforts to cause all
Registrable Securities which the Company has been requested by MidAmerican to
register to be registered under the Securities Act to the extent necessary to
permit their sale or other disposition in accordance with the intended method of
distribution; provided that the Company shall have the right to postpone or
withdraw any registration effected pursuant to this Section 2 without obligation
to MidAmerican.
(b) In connection with any offering under this Section 2 involving an
underwriting, the Company shall not be required to include any Registrable
Securities in such underwriting unless MidAmerican enters into customary
agreements (including the underwriting agreement on customary form) and takes
such other actions as are reasonably required in order to facilitate the sale of
the Registrable Securities. Notwithstanding Section 2(a), if the managing
underwriter or underwriters of such offering deliver a written opinion to the
Company that either because of (i) the kind of securities that the Company,
MidAmerican and any other persons or entities intend to include in such offering
or (ii) the size of the offering that the Company, MidAmerican and any other
persons or entities intend to make, the success of the offering would be
materially and adversely affected by inclusion of all or part of the Registrable
Securities, then the Company shall be required to include in the underwriting
only the number of Registrable Securities, if any, which the managing
underwriter believes may be sold without causing such material adverse effect,
but in no
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event shall the amount of Registrable Securities be reduced below 20% of the
total amount of the securities included in the offering.
3. Registration Procedures. Subject to Section 2(a), whenever MidAmerican has
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requested that any Registrable Securities be registered pursuant to this
Agreement, the Company will use its reasonable efforts to effect the
registration of such Registrable Securities in accordance with the intended
method of disposition thereof, and pursuant thereto the Company will as
expeditiously as possible:
(a) prepare and file with the Securities and Exchange Commission (the
"SEC") a registration statement with respect to such Registrable Securities and
use its reasonable efforts to cause such registration statement to be declared
effective;
(b) prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective until the date which is
24 months from the date the registration statement is declared effective
(subject to extension pursuant to Section 5(c) hereof) (the "Effectiveness
Period"), or such shorter period ending when (i) all Registrable Securities
covered by such registration statement have been sold in the manner set forth
and as contemplated in such registration statement, or (ii) in the opinion of
counsel to the Company, which opinion shall be satisfactory in form, scope and
substance to MidAmerican, registration of the Registrable Securities is (A) no
longer required under the Securities Act and (B) MidAmerican may sell all
remaining Registrable Securities in the open market without limitations as to
volume and without being required to file any forms or reports under Rule 144
with the SEC under the Securities Act or the General Rules and Regulations of
the SEC (the "Regulations"); and comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
registration statement during such period in accordance with the intended
methods of disposition by MidAmerican set forth in such registration statement;
(c) furnish to MidAmerican such number of copies of each registration
statement, each amendment and supplement thereto, the prospectus included in
such registration statement (including each preliminary prospectus) and such
other documents as MidAmerican may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by MidAmerican;
(d) use its reasonable efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions as
MidAmerican reasonably requests and do any and all other acts and things which
may be reasonably necessary or advisable to enable MidAmerican to consummate the
disposition in such jurisdictions of the Registrable Securities (provided that
the Company will not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to
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qualify but for this subparagraph, (ii) subject itself to taxation in any such
jurisdiction, or (iii) consent to general service of process in any such
jurisdiction); and
(e) cause all such Registrable Securities to be listed on each securities
exchange on which securities of the same class issued by the Company are then
listed.
4. Registration Expenses.
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All expenses incident to the Company's performance of or compliance with
this Agreement, including without limitation all registration and filing fees,
fees and expenses of compliance with securities or blue sky laws, printing
expenses, messenger and delivery expenses, and fees and disbursements of counsel
for the Company and all independent certified public accountants, underwriters
(excluding discounts and commissions) and other Persons (as used herein,
"Person" shall be deemed to refer to individuals or entities, as appropriate)
retained by the Company (all such expenses being herein called "Registration
Expenses"), will be paid by the Company, except that MidAmerican shall pay a pro
rata share of the Registration Expenses based upon the ratio of the number of
MidAmerican Registrable Securities sold in the offering to the total number of
securities sold in the same offering, and except that each party will, in any
event, pay its internal expenses (including, without limitation, all salaries
and expenses of its officers and employees performing legal or accounting
duties), the expenses of its annual audit or quarterly review, the expense of
its liability insurance, the expenses and fees for listing its securities to be
registered on each securities exchange on which similar securities issued by the
Company are registered, and its underwriting discounts and commissions.
5. MidAmerican Agreements and Covenants. MidAmerican agrees that:
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(a) Neither MidAmerican nor any of MidAmerican's affiliates (as defined in
the Regulations) will take, directly or indirectly, during the term of this
Agreement, any action designed to stabilize (except as may be permitted by
applicable law) or manipulate the price of any security of the Company.
(b) MidAmerican shall promptly furnish to the Company any and all
information as may be required by, or as may be necessary or advisable to comply
with the provisions of, the Securities Act, the Regulations, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations of the SEC thereunder in connection with the preparation and filing
of any registration statement pursuant hereto, or any amendment or supplement
thereto, or any preliminary prospectus or prospectus included therein. All
information to be so furnished will not include any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
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(c) Upon receipt of any notice from the Company of the happening of any of
the following events, MidAmerican will forthwith discontinue disposition of the
Registrable Securities covered by such registration statement or prospectus
until MidAmerican's receipt of the copies of the supplemented or amended
prospectus with respect to said event, or until MidAmerican is advised in
writing (the "Advice") by the Company that the use of the applicable prospectus
may be resumed, and has received copies of any amendments or supplements
thereto:
(i) The issuance by the SEC of any stop order suspending the
effectiveness of such registration statement or of any order preventing or
suspending the use of any preliminary prospectus or the initiation of any
proceedings for that purpose;
(ii) The receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of such
registration statement or any of the Registrable Securities for offer or sale in
any jurisdiction, or the initiation or threatening of any proceeding for such
purpose;
(iii) The happening of any event or any information becoming known that
makes any statement made in such registration statement or related prospectus or
any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires the making of any changes in
such registration statement, prospectus or documents; or
(iv) The Company's reasonable determination that a post-effective
amendment to such registration statement would be appropriate.
In the event the Company shall give any notice referred to in the prior
sentence, the Effectiveness Period shall be extended by the number of days
during such period from and including the date of the giving of such notice to
and including the date when MidAmerican shall have received (A) the copies of
the supplemented or amended prospectus contemplated above or (B) the Advice.
(d) Prior to any disposition of Registrable Securities by MidAmerican
during the Effectiveness Period, MidAmerican shall give written notice of such
intended disposition to the Company, including the anticipated date thereof, and
MidAmerican shall not effect such disposition until MidAmerican shall have
received from the Company either (i) copies of a supplemented or amended
prospectus as contemplated above, or (ii) the Advice and copies of any
amendments or supplements to the then in use prospectus.
6. Indemnification.
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(a) The Company agrees to indemnify, to the extent permitted by law,
MidAmerican and its officers and directors and each Person, if any, who controls
MidAmerican (within the meaning of the Securities Act or the Exchange Act)
against all losses, claims, damages, liabilities and expenses, including
attorneys' fees and the costs of investigation or defense, caused by any untrue
or alleged untrue statement of material fact contained in any registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such information was furnished in writing to the
Company by MidAmerican expressly for use therein or by MidAmerican's failure to
deliver a copy of the registration statement or prospectus or any amendments or
supplements thereto after the Company has furnished MidAmerican with a
sufficient number of copies of the same. In connection with an underwritten
offering, the Company will indemnify such underwriters, their officers and
directors and each Person who controls such underwriters (within the meaning of
the Securities Act) to the same extent as provided above with respect to the
indemnification of MidAmerican.
(b) In connection with any registration statement in which MidAmerican is
participating, MidAmerican will furnish to the Company in writing such
information and affidavits as the Company reasonably requests for use in
connection with any such registration statement or prospectus and, to the extent
permitted by law, will indemnify the Company, its directors and officers and
each Person who controls the Company (within the meaning of the Securities Act
or the Exchange Act) against any losses, claims, damages, liabilities and
expenses resulting from any untrue or alleged untrue statement of material fact
contained in the registration statement, prospectus or preliminary prospectus or
any amendment thereof or supplement thereto or any omission or alleged omission
of a material fact required to be stated therein or necessary to make the
statements therein not misleading, but only to the extent that such untrue
statement or omission is contained in any information or affidavit so furnished
in writing by MidAmerican.
(c) Any Person entitled to indemnification hereunder will (i) give prompt
written notice to the indemnifying party of any claim with respect to which it
seeks indemnification and (ii) unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist with respect to such claim, permit such indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party. If such defense is assumed, the indemnifying party will not
be subject to any liability for any settlement made by the indemnified party
without its consent (but such consent will not be unreasonably withheld). An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such claim.
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(d) The indemnification provided for under this Agreement will remain in
full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling Person of such
indemnified party and will survive the transfer of securities. The Company also
agrees to make such provisions, as are reasonably requested by any indemnified
party, for contribution to such party in the event the Company's indemnification
is unavailable for any reason.
(e) If the indemnification provided for in this Section 6 is unavailable to
an indemnified party in respect of any losses, claims, damages, liabilities or
judgments referred to herein, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities and judgments in such proportion as is appropriate to reflect the
relative fault of each such party in connection with such statements or
omissions or alleged statements or omissions, as well as well any other relevant
equitable considerations. The relative fault of such indemnifying party and
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact related to information
supplied by such party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
InterCoast and MidAmerican agree that it would not be just and equitable if
contribution pursuant to this Section 6(e) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding sentence.
The amount paid or payable by a party as a result of losses, claims, damages,
liabilities or judgments shall be deemed to include, subject to the limitation
set forth in Section 6(c) , any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 6(e),
MidAmerican shall not be required to contribute an amount in excess of the
amount by which the total price at which the common stock of the Company owned
by MidAmerican was sold to the public (net of underwriting discounts and
commissions) exceeds the amount of any damages which MidAmerican has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation.
7. Transfer of Registration Rights.
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(a) Subject to the other provisions of this Section 7, the rights granted
to MidAmerican under this Agreement may be transferred by MidAmerican to any
affiliate of MidAmerican or to any Person acquiring all or part of the
Registrable Securities held by MidAmerican; provided, however, that the Company
is given written notice by the transferee at the time of any such transfer
stating the name and address of the transferee and identifying the Registrable
Securities with respect to which such rights are being assigned.
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(b) Any transferee of the Registrable Securities to whom rights under this
Agreement are transferred shall, as a condition to such transfer, deliver to the
Company a written instrument by which such transferee agrees to be bound by the
terms, conditions, duties, obligations and restrictions of this Agreement, to
the same extent as if such transferee were MidAmerican, together with an opinion
of counsel reasonably satisfactory to the Company that it is not necessary to
register such transfer of such Registrable Securities under the Securities Act
or any state blue sky laws. The rights of a transferee under paragraph 7(a)
above shall be the same rights granted to MidAmerican under this Agreement,
except as otherwise provided in this Section 7. The term Holder hereinafter
used in this Section 7 shall include all persons then having registration rights
under this Agreement, including MidAmerican if it shall hold any Registrable
Securities.
(c) MidAmerican shall be permitted to transfer less than all of the
Registrable Securities it owns at any time only if it transfers not less than
500,000 of such Registrable Securities and MidAmerican and the proposed Holder
comply with all provisions of this Section 7. Notwithstanding anything to the
contrary in this Section 7, without the prior written consent of the Company, no
transfer of rights under this Agreement will be permitted if as a result of any
proposed transfer there would be more than 5 Holders.
(d) Upon the transfer of Registrable Securities by MidAmerican pursuant to
Section 7(c), the following additional terms and conditions with respect to the
rights and obligations of the Holders and the Company shall apply:
(1) With respect to Demand Registrations, only the Holder(s) of a
majority of the Registrable Securities may request a Demand
Registration pursuant to Section 1(a). Within 10 days of receiving such
a request, the Company will notify the other Holders of the request for
a Demand Registration and will include in such Demand Registration all
Registrable Securities with respect to which the Company has received a
written request for inclusion within 10 days after the date on which
the Company gave such notice. Each request will also specify the number
of Registrable Securities to be so registered. Notwithstanding, if the
offering is underwritten and if the managing underwriter or
underwriters of such offering deliver a written opinion to the Holders
that the success of the offering would be materially and adversely
affected by inclusion of all or part of the Registrable Securities
requested by the Holders, then the number of Registrable Securities
required to be included in such underwriting for each such Holder shall
be pro rata based upon the number of Registrable Securities requested
by such Holder in light of the total number of Registrable Securities
requested by the Holders to be inlcuded in such underwriting.
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(2) Notwithstanding any transfers of rights hereunder, the Company
shall not be obligated to effect more than two Demand Registrations in
the aggregate and the total number of Registrable Securities to be
included in any Demand Registration shall not be less than 1,000,000;
(3) The "holdback" provisions of Section 1(c) shall apply to all
Holders; and
(4) With respect to "piggyback" rights set forth in Section 2, in the
event the managing underwriter has provided the notice described in
Section 2(b), and a result of which, less than all of the Registrable
Securities requested by the Holders can be included, then the number of
Registrable Securities to be included in the underwriting for each such
Holder shall be pro rata based upon the number of Registrable
Securities requested by such Holder in light of the total number of
Registrable Securities requested by all the Holders to be included in
such underwriting.
(e) A transferee to whom rights are transferred pursuant to this Section 7
may not again transfer such rights to any other Person, other than as permitted
in this Section 7.
8. Miscellaneous.
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(a) Notices. All notices, requests, and demands required or permitted to
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be given pursuant to this Agreement shall be in writing and must be given to or
made upon the respective parties hereto either by hand delivery or by registered
or certified mail, return receipt requested, addressed as follows:
If to MidAmerican:
MidAmerican Capital Company
666 Grand Avenue
26th Floor, Ruan Center
Des Moines, Iowa 50309
Attention: President
If to the Company:
InterCoast Energy Company
666 Grand Avenue
26th Floor, Ruan Center
Des Moines, Iowa 50309
Attention: Chairman and Chief Executive Officer
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Any party may change its address by notice to the other parties given in
like fashion. Any notice so duly sent by mail by one party to another shall be
deemed given five days after deposit in a proper governmental mailing facility.
(b) Descriptive Headings. The descriptive headings herein have been
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inserted for convenience only and shall not be deemed to limit or otherwise
affect the construction of any provisions hereof.
(c) Governing Law. This Agreement is made under and shall be governed by
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and interpreted in accordance with the laws of the State of Iowa.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first above written.
INTERCOAST ENERGY COMPANY
By:
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Name:
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Title:
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MIDAMERICAN CAPITAL COMPANY
By:
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Name:
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Title:
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U\OTHER\REGRTS.1
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